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A new report from blockchain compliance firm AMLBot reveals a significant flaw in Tether’s address blacklisting process, allowing illicit actors to move substantial funds before enforcement actions take effect. The delay stems from Tether’s multi-signature contract setup on both Ethereum and Tron, creating a window of opportunity for criminals.
The blacklisting process involves two multi-signature transactions. First, a pending call to “addBlackList” is submitted, publicly announcing the target address. A second transaction then confirms this, effectively blacklisting the address. However, AMLBot’s analysis shows a considerable delay between these two transactions, averaging 44 minutes in one observed instance. This delay provides sufficient time for those aware of the impending blacklist to move their assets.
AMLBot’s data indicates that over $28.5 million in USDT was withdrawn from Ethereum addresses during these delay periods between November 28, 2017, and May 12, 2025. On the Tron blockchain, the figure exceeds $49.6 million. In total, over $78.1 million was moved before blacklisting was enforced across both blockchains. On Tron, a notable 4.88% (170 out of 3,480) of blacklisted wallets exploited this lag, moving an average of $291,970 each.
This vulnerability contradicts Tether’s claims regarding its asset-freezing capabilities. While Tether, Tron, and TRM Labs jointly froze over $126 million in USDT in 2024, AMLBot’s findings highlight a critical weakness in the system’s efficiency. The report doesn’t definitively state whether the delay is a technical limitation or a procedural one within Tether’s internal processes. Tether has yet to comment publicly on the report’s findings. The report concludes that the delay, whether technical or procedural, presents a significant risk, allowing sophisticated actors to circumvent Tether’s enforcement mechanisms.
